About "barter":
Like-Kind Exchanges - Real Estate Tax Tips
Generally, if you exchange business or investment property solely for
business or investment property of a like-kind, no gain or loss is
recognized under Internal Revenue Code Section 1031. If, as part of
the exchange, you also receive other (not like-kind) property or
money, gain is recognized to the extent of the other property and
money received, but a loss is not recognized.
Section 1031 does not apply to exchanges of inventory, stocks, bonds,
notes, other securities or evidence of indebtedness, or certain other
assets.
(Google is our friend: 'real estate exchage tax' yields this link:
http://www.irs.gov/businesses/small/industries/article/0,,id=98491,00.html
)
tom
On Apr 12, 2009, at 9:27 PM, Russ Abbott wrote:
Nice point about money. I believe that even barter exchanges are
construed as income. So there is no escape from the taxation trap
except, perhaps, complete self-sufficiency.
-- Russ
On Sun, Apr 12, 2009 at 8:48 PM, Tom Carter
<[email protected]> wrote:
Russ -
Thanks . . .
As far as thinking about how economies "really" work . . . what
follows is not really a response to your questions, but a source for
thinking about transitions from subsistence/barter to a "monetized"
system . . .
A clever scheme:
1.) Find a region where there is a subsistence/barter
"economy" (with, typically, tribal/communal shared land).
2.) With "high minded" fanfare, institute "land reform." That
is, divide the land up into small plots, and assign "ownership" of
the plots to individuals.
3.) Now, the clever part: establish a "land tax," but make
sure that the "land tax" must be paid in currency. Note that an
"income tax" won't work, because then people could remain in their
subsistence/barter mode, avoid having any accountable "income," and
thus avoid the "taxation" trap . . .
4.) Before long, everyone will have to either switch to "cash
crops," or engage in "wage labor" (or, more likely, both) in order
to get currency to pay the "land tax."
5.) You will then have a "monetized" economy, together with a
ready pool of "wage laborers," and "consumers" who purchase goods,
since they have moved to "cash crops," away from subsistence farming.
A quick Google search yields this essay (the Google search was:
colonial land taxation cash crop):
http://www.cfeps.org/pubs/wp-pdf/WP25-Forstater.pdf
A quote from the essay: "The history of direct taxation in
colonial capitalism also has some wider
theoretical implications. It shows, for example, “that
‘monetization’ did not spring forth
from barter; nor did it require ‘trust’—as most stories about the
origins of money claim”
15 (Wray, 1998, p. 61). In the colonial capitalist context, money
was clearly a “creature of
the state” "
Anyway . . .
tom
On Apr 12, 2009, at 5:07 PM, Russ Abbott wrote:
Hey Tom,
Very nice work. Do you have anything that would help build
intuition about how it all works?
Also, what I'm after is an understanding of how an economy works.
Your model says that an economy that satisfies certain conditions
will (inevitably) wind up with a certain wealth distribution. But
it doesn't tell me what's happening in the economy -- only that
some people will become rich and a lot more will become poor. I'd
like to develop a feeling for what's actually going on in the
economy.
For example, in my original model in which (a) each agent needs to
consume one unit of each of N different resources at each time step
(b) there are N agents each of which produces N units of a
particular resource i (different from each agent) and (c) agents
trade (barter style) units of resource one for one as needed, it
seems to me that there will be no wealth accumulation. Everything
that is produced is consumed, and as long as agents are able to
trade with each other on a one-for-one basis, every agent survives
but no agent accumulates any excess. So that doesn't quite fit the
model.
Furthermore, what happens if some agents (as a result of
technological advances) are able to produce N units of a resource
in less than one time step? Then those agents will have time on
their hands and can produce something other than the resource that
they contribute to the community. So they start producing resources
that no one needs -- but that perhaps some agents want.
The agents with time on their hands then exchange these
discretionary resources among each other. Again this might be
modeled as a barter system -- although some convenient resource
could come to serve as a unit of measure and medium of exchange. If
you take this to the limit so that every agent is producing nothing
but discretionary resources (i.e., the "needs" are so cheap to
produce that there is no point keeping track of them), then what?
In this model, every agent creates N units of value every time
step. So there will never be any agents with no resources.
In addition, since every transaction involves the exchange of units
of resource of the same value, it seems like there is no room for
accumulation of wealth. (This is assuming that one acquires a
resource in order to consume, i.e., destroy, it.) So when two
agents exchange resources, they are both left poorer since they
each consume the received resource. In this model an agent grows
wealthy only by not exchanging resources and keeping all the
resources it produces. It then has the ability eventually to go on
a shopping spree, pig out, and consume lots and lots of resources
at one time. But what else is that wealth good for in this economy?
So all this doesn't quite seem to fit the model you are describing.
-- Russ
On Sun, Apr 12, 2009 at 4:31 PM, Tom Carter
<[email protected]> wrote:
All -
The real "random walks" link:
http://csustan.csustan.edu/~tom/SFI-CSSS/2009/LectureNotes/Random%20Walk/
tom
On Apr 12, 2009, at 3:58 PM, Tom Carter wrote:
All -
Apropos some of this, there are notes from lectures I've given
recently on some of these topics here:
Math Club lecture (including some discussion of the "wealth
model," and some "power laws" discussion)
Black-Scholes/High Finance
Random Walks
tom
On Apr 12, 2009, at 11:16 AM, Stephen Guerin wrote:
Russ writes:
there are N agents; N resources are needed for survival. So if
the aggregate production is evenly distributed everyone has a
subsistence living.
I don't think this is necessarily true.
Your mentioning a gift economy is further a reason to look at a
model as simple as the Tom Carter/Victor Yakovenko model I
mentioned where agents are giving a dollar to another random
agent (ie gifting). This model, with minimal assumptions,
generates non-equitable distribution of wealth where very few
agents end up holding most of the wealth (Boltzmann distribution)
even though the average wealth in the model is unchanged at $50/
agent.
The important constraint in the model is that agents can only
have positive amounts of cash/goods -- they can't gift a dollar
they don't have.
Just as energy distributes itself as a boltzmann distribution as
particles can not have less than zero energy after a collision
(transaction). Basically we have diffusion against a wall in both
models. Of course we can introduce debt and progressive taxes to
the economic model to mess with the dynamics, but I think it's
important to recognize the non-equity is there from the beginning
with very minimal assumptions. Note that the wealthy agents do
turnover in this model so the definition of what is equitable is
important.
-Steve
On Apr 12, 2009, at 11:40 AM, Russ Abbott wrote:
Thanks for all the responses. What prompted my question was
thinking about the "end state" of the current financial crisis.
The question is: what does a successful stable economy look
like? Only secondarily was I asking about markets, wealth
distribution across society, etc., which is what many of the
existing models focus on.
In attempting to describe the foundations of a stable economy I
was making the following assumptions.
• We live off the gift of free energy -- the sun. So in some
sense a stable economy requires little more than harvesting that
energy.
• As human beings we have the innate (i.e., also free) ability
to transform that energy into other forms that we need. For
example, most of us on this list are capable of writing code.
I'm taking skills like that as more free gifts from nature. Yes,
it requires, education, study, practice, etc., but ultimately it
grows out of our being alive, a free gift.
• In talking about "free gifts" from nature, I'm not trying to
be spiritual, new age-y, etc. It just seems to me to be the way
the world works. So I'm willing to build it into the model.
• But, even though we live off these free gifts, we all need
energy to survive. If you look at my "Reductionist blind spot"
paper, you see that we are what I call dynamic entities. Dynamic
entities need to import externally supplied energy to persist --
in our case food, at least. So even though we find ourselves in
a world in which there is externally supplied energy available
to be imported (from the sun and its stored versions), we are
each still required to do something to import it for ourselves.
That is, we must each work for a living.
• Presumably a standard economic model says that we live at a
subsistence level if the amount of work we do matches our needs.
If I spend all my working hours doing nothing more than earning
what I need to survive, that's subsistence.
• I want to allow specialization so I suggested that each agent
specializes in producing some resource but that the aggregate
amount produced exactly satisfies the needs of the producers.
That is, each agent produces N units of his specialty resource;
there are N agents; N resources are needed for survival. So if
the aggregate production is evenly distributed everyone has a
subsistence living.
• A society/economy grows "richer" when it can produce enough
resources for itself without requiring everyone to work on
producing those resources. In that case, the available excess
labor can produce discretionary items, like art, pop music,
software, soft drinks, philosophy, etc.
• As technology advances a smaller and smaller percentage of
the population is needed to produce the necessities. The rest
can spend their time producing discretionary items.
• So at this point we are all well fed, and we are all willing
to spend our extra money supporting our local NPR stations.
• But what happens when there is shock to the economy and
people find that they have less "wealth" than they thought they
had? Presumably they will spend less on discretionary items, and
the people who create those items will be out of work. Where do
we go from there?
So I am looking for a model to explore these kinds of issues.
I must say that I'm surprised at the number of things I had to
write down to explain what I am after. I thought it would be
simpler. And I want something as simple as possible.
Any thoughts/suggestions?
-- Russ
On Sun, Apr 12, 2009 at 9:14 AM, Victoria Hughes <[email protected]
> wrote:
> Attention and action = the price to consume.
is it possible to have an idea / new information and not in some
way, internally or externally, react to it?
Memes spread. Humans by design infect each other on all levels.
The Complex seems like a great example: by definition intends to
do this.
Idea / attention / action-reaction / experience / new idea.
And so forth.
Am enjoying the bouncing of ideas and information in this
particular string...
Tory
On Apr 12, 2009, at 7:04 AM, Jochen Fromm wrote:
The central property which emerges in markets is
the price. The central law which rules markets is
the law of supply and demand. A basic agent-based
model for markets should explain how both, the
price and the law of supply and demand, emerge
in competitive markets. It should be simple to
extend such a model to explain bubbles and crashes.
As far as I know, there is no basic model of
markets in general, there are only agent based models
of specific markets, for example stock markets,
financial markets and electricity markets. Perhaps
the law of supply and demand is too simple to justify
such a model?
Epstein and Axtell's Sugarscape is a model where
agents begin to accumulate "wealth" in some form,
but it is more about evolution of societies and less
about market mechanisms and economies.
It would be interesting to apply a basic agent-based
market model to the society of mind. If we consider the
crowd within and the battle of ideas which is going on
inside our minds, can we create an agent-based model
to explain the 'market of information' ? We have a
demand for new or highly emotional stuff, are constantly
supplied with information from the outside, and the price
we have to pay to consume it is attention.
-J.
----- Original Message ----- From: Russ Abbott
To: The Friday Morning Applied Complexity Coffee Group
Sent: Sunday, April 12, 2009 9:00 AM
Subject: [FRIAM] Agent-based market models
Does anyone know of good examples of generic agent-based market
economies? I'm thinking of something as simple as this.
A population consists of agents each of which has certain
continuing needs (such as food, clothing, shelter, Internet
access, etc.) to survive. As a starting point, let's assume
that each agent needs one unit of each of N resources every
time period. Let's also assume that each agent is specialized
and is capable of creating enough of one of the needed
resources to satisfy the needs of N agents. (The fact that I
used the same N in both places was intentional.) To keep it
simple let's assume that these acts of creation occur from
scratch, i.e., that the creator doesn't need raw materials,
that all that's necessary for an agent to create a needed
resource is that the agent be alive. The agents presumably
develop a barter economy, trading the resources they create for
the resources they need to stay alive. Perhaps markets develop,
and perhaps money develops. At this point the economy should be
fairly stable. Each agent creates enough stuff so that s/he can
trade it for what s/he needs to stay live.
Perhaps some of the agents learn how to be more efficient in
creating their resource and begin to accumulate "wealth" in
some form. Perhaps the agents have discretionary desires,
which they fill if they have enough resources left over after
meeting their basic needs. Perhaps there are communal services
that are paid for by taxes or memberships. This could become
increasingly elaborate.
It seems to me that models of this sort must have been
developed -- perhaps many times. Does anyone know of any
references to this sort of work?
Thanks.
-- Russ Abbott
_____________________________________________
Professor, Computer Science
California State University, Los Angeles
o Check out my blog at http://bluecatblog.wordpress.com/
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Meets Fridays 9a-11:30 at cafe at St. John's College
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Meets Fridays 9a-11:30 at cafe at St. John's College
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Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org
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Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org
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Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org
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Meets Fridays 9a-11:30 at cafe at St. John's College
lectures, archives, unsubscribe, maps at http://www.friam.org
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Meets Fridays 9a-11:30 at cafe at St. John's College
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